At what price will Kidokinetics purchase the franchisee's equipment?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.2.1. Franchisor has the option, but not the obligation, to be exercised within thirty (30) days after termination or expiration of this Agreement, to purchase from Franchisee any or all of the equipment (including any point-of-sale system or computer systems), vehicles, signs, fixtures, advertising materials and supplies of Franchisee related to the operation of the Kidokinetics Business, at Franchisee's cost or fair market value, whichever is less. Franchisor will purchase Franchisee's assets free and clear of any liens, charges, encumbrances or security interests and Franchisor will assume no liabilities whatsoever, unless otherwise agreed to in writing by the parties. If the parties cannot agree on the fair market value within thirty (30) days of Franchisor's exercise of its option, fair market value will be determined by two (2) appraisers, with each party selecting one (1) appraiser, and the average of their determinations will be binding. In the event of such appraisal, each party will bear its own legal and other costs and split the appraisal fees equally. If Franchisor elects to exercise its option to purchase, it will have the right to set off (i) all fees for any such independent appraiser due from Franchisee, (ii) all amounts due from Franchisee to Franchisor or any of its affiliates and (iii) any costs incurred in connection with any escrow arrangement (including reasonable legal fees), against any payment and will pay the remaining amount in cash. Closing of the purchase will take place no later than thirty (30) days after determination of the fair market value.
- 17.2.2. With respect to the options described in Sections 17.2.1, Franchisee must deliver to Franchisor in a form satisfactory to Franchisor, such warranties, deeds, releases of lien, bills of sale, assignments and such other documents and instruments that Franchisor deems necessary in order to perfect Franchisor's title and possession in and to the properties being purchased or assigned and to meet the requirements of all tax and government authorities. If, at the time of closing, Franchisee has not obtained all of these certificates and other documents, Franchisor may, in its sole discretion, place the purchase price in escrow pending issuance of any required certificates or documents.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics has the option to purchase a franchisee's equipment, vehicles, signs, fixtures, advertising materials, and supplies after the termination or expiration of the franchise agreement. This is not an obligation, but an option Kidokinetics can exercise within 30 days of the agreement's end.
The purchase price will be the franchisee's cost or the fair market value of the items, whichever is less. This protects Kidokinetics from overpaying for used assets. The assets must be free of any liens or encumbrances, and Kidokinetics assumes no liabilities unless otherwise agreed in writing.
If Kidokinetics and the franchisee cannot agree on the fair market value, each party will select an appraiser, and the average of their appraisals will be binding. Each party bears their own legal costs and splits the appraisal fees equally. Kidokinetics can offset any fees owed by the franchisee, amounts due to Kidokinetics or its affiliates, and costs related to escrow arrangements against the purchase price, paying the remaining amount in cash. The closing of the purchase will occur within 30 days after the fair market value is determined.
The franchisee must provide warranties, deeds, releases of lien, bills of sale, assignments, and other necessary documents to perfect Kidokinetics's title and possession of the purchased properties. If these documents are not obtained by the closing, Kidokinetics may place the purchase price in escrow until the required certificates or documents are issued.